How to avoid getting ripped off when exchanging currency



Elissa Suh

Elissa Suh

Senior Editor & Disability Insurance Expert

Elissa Suh is a senior editor and disability insurance expert at Policygenius, where she also covers wills, trusts, and advance planning. Her work has appeared in MarketWatch, CNBC, PBS, Inverse, The Philadelphia Inquirer, and more.

Published May 8, 2019 | 3 min read

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When you’re on vacation outside of the country, the last thing you want to do is to waste time and money searching for a way to get cash.

If you’ve ever exchanged currency before, you may have gotten the feeling that you received a little less than your money was worth. Conversion rates can be confusing, but a true and fair rate actually does exist. It's called the mid-market exchange rate.

If you look up the mid-market exchange rate for a given currency on Google or a currency authority like, it will give you a good sense of whether or not you’re getting a fair price. Think of the mid-market exchange rate as an average of foreign exchange rates for a currency.

Most banks and currency exchange businesses have built-in fees around the real exchange rate, topping it with margins so they can make money. It’s why the kiosk in your hotel will ask you for nearly $18 when all you wanted was 15 euros (the conversion rate as of May 2 is $16.76). It might sound not seem like a lot, but a few dollars here and there can add up quickly and throw a wrench in your vacation budget.

While you won’t be able to exchange your dollars at the exact mid-market exchange rate, here are some tips to avoid the hassle of scrounging for cash and potentially being shortchanged.

Check your local bank

Did you know you can visit a bank branch to ask them to exchange currency for you? This service typically comes at no cost if you have an account with them. Most larger banks should have common currencies like euros on hand already, but if you’re looking for Georgian lari or Moroccan dirham you might want to let them know ahead of time.

Ask a friend

Seriously. Your coworker who couldn’t stop raving about his honeymoon in Italy or your friend who finally backpacked through Europe might have some extra euros laying around that they didn’t have time to exchange. They might be kind enough to let you buy them at a fair rate, or who knows, just give them to you.

Find an ATM abroad

If your bank has no fees or will reimburse you for them, you can use your debit card to withdraw cash overseas like you would at home. Alert your bank ahead of time that you’ll be traveling, and always withdraw in the local currency and not the dollar for a more favorable rate. The two most common fees you should never pay when using an ATM abroad are a foreign transaction fee (usually 1% to 3%) and an ATM fee (a flat fee of a few dollars)

Avoid airport kiosks unless you absolutely have to

In addition to unfavorable exchange rates, currency exchange companies like Travelex or Forex can sometimes carry separate transaction fees. But you can place an order ahead of time online to cut out some of these charges. Keep in mind the rates they advertise online tend to fall below the market exchange rate.

Ditch traveler’s checks

Usually not worth the effort. A traveler’s check is a check for a set designation issued to you by your bank or credit union to exchange for local currency. You’ll have to sign for it in person at a bank or credit union, and then once you’re on vacation track down a financial institution that will accept it. If you’re lucky, your hotel might be able to cash it for you. There will likely be a fee on both ends: from the institution issuing the check, and the one cashing it.

Use a credit card with no foreign transaction fees

Going cashless is convenient and free if your card doesn’t charge foreign transaction fees. Plus you’ll have the added benefit of fraud protection and the potential to earn extra rewards for travel. Again, ask to be charged in the local currency if given the choice, and do not use your credit card to get a cash advance, which is basically like a high-interest rate loan.

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Image: Sara Kurfeß